Monday, 9 May 2011

BAE Systems rethinks decision on artillery contracts

The FH-77B 05 howitzer, which BAE Systems had decided not to offer the Indian MoD in its January tender. Now, acknowledging the draw of the Indian market, BAE Systems seems to be concluding that it simply cannot afford to be left out.

By Ajai Shukla

Business Standard, 9th May 11

The feeling is taking root within BAE Systems that the British defence multinational has blundered in opting out of the Indian tender for 155 millimetre towed artillery guns. This was evident on Friday, in the company’s Annual Business Review meeting in New Delhi, when senior executives argued that last month’s decision not to bid in the MoD’s Rs 8000 tender for 1580 towed guns would seriously disadvantage BAE Systems in competing for other tenders in the Indian Army’s Rs 20,000 crore artillery modernisation programme.

This growing fear was summed up by a source that was present in that meeting: “If we don’t take part in this tender, we’ll remain out of the Indian market for the next three decades.”

Shortly before the tender submission deadline of 28th April, BAE Systems had written to the MoD that it would not submit a bid in the contract for towed guns. Now, opinion within the company is veering around to the viewpoint that BAE Systems must bid for this tender.

The deadline of 28th April has since been extended by two months and the MoD will now be accepting bids up to 28th June. BAE Systems, therefore, has the time to change its decision.

Last month, BAE Systems had explained why the company was not bidding, despite participating creditably in earlier tenders, including field trials. To conform to the stringent Indian Army specifications laid down in an earlier RFP (Request for Proposals, as the MoD terms tender requests), BAE Systems had made expensive modifications to the gun it was offering, a modernised version of the battle-proven, albeit controversial, Bofors FH-77B gun. But the current tender, issued on 28th Jan 11, diluted the gun’s specifications in order to bring in more vendors. That made the BAE Systems gun over-designed, over-qualified, and probably too expensive.

The company’s spokesperson, Guy Douglas, told wire service, IANS, that the BAE Systems FH-77B 05 gun “was specifically designed for and demonstrated to meet the Indian Army’s requirements as stated in previous RFPs… We found that the new RFP includes technical and performance relaxations that allow less capable weapon systems to enter the competition. This significantly reduces the competitive advantage FH-77B 05 derives from its greater capability.”

It is not yet clear which artillery manufacturers will compete in this new tender for the long-delayed purchase of 155 mm towed guns, a procurement that has dragged on for almost a decade. Many of the world’s premier manufacturers have been eliminated through blacklisting, including Singapore Technology Kinetics (STK); South African company, Denel; Israeli company, Soltam; and German manufacturer, Rheinmetall.

Fuelling the growing belief that BAE Systems must bid in this tender are behind-the-scenes requests from the army’s artillery directorate, which has become convinced, over several rounds of earlier trials, of the quality of the FH-77B 05 Bofors gun. Given the army’s backing, BAE Systems’ “pro-participation” advocates argue that a few tens of millions of dollars spent on modifications would be an acceptable price for winning this Rs 8000 crore contract and taking pole position in the other lucrative gun contracts that total up to Rs 20,000 crores.

Contacted for comments, BAE Systems spokesperson, Guy Douglas, denied that there was a rethink under way and ruled out the possibility of a new decision ahead.

The expansively named Artillery Vision 2027 and the MoD-sanctioned Artillery Modernisation Plan visualise four major gun purchases ahead: besides the contract for 1580 towed guns, the army is also buying 140 ultralight 155 mm, 39 calibre howitzers from BAE Systems for about Rs 3000 crore. Another Rs 3500 crore is up for grabs for the purchase of 100 track-mounted, 155 mm, 52 calibre howitzers; and Rs 4000 crore for 180 similar vehicle-mounted guns for self-propelled artillery regiments.

BAE Systems has formed a JV with the Mahindra group, setting up a company, Defence Land Systems, which will be the local manufacturing partner for artillery contracts won by BAE Systems in India. Mahindra is likely to play an important role in any BAE Systems decision to participate in the tender. The final decision will be taken by BAE Systems’ Land & Armaments Divisions.

7 comments:

Anonymous
said...

i really hope the MOD or the army takes a strong position this time and make the goverment choose the bofors gun as it is the best for the indian army even the commanders of the army want only the bofors since it is the only gun that compleately satisfies there requirements . I really hope the goverment have put the bofor's ghost behind them and choose that gun even. By the way sir can you also write about the progress that the DRDO led consortium has made in the manufacture of an indigeneous artillery gun

Why can't the procurement be a two stage process. In the First Stage all the technical aspects of the bids are evaluated and the technically acceptable bids are selected. At this First Stage, all issues techncial, contractual, etc are evaluated and addressed and only bids which pass will be shortlisted. No commercial will be discussed during this First Stage.

Then comes the Second Stage. In the second stage all (technically acceptable) bidders will provide their commercial bids and the lowest will win.

Why does it have to take several years for the DRDO to make a 155mm gun?They have been making the 105mm field gun for decades no?

It is a little shameful that even in the 21st century India has to import field artillery, when we were the ones who invented it. All our forts deployed some of the best known artillery systems known to mankind.

I understand that we have fallen far behind technologically since that era.

India did not invent artillery. Mechanical "ballistic" weapons were in use in many countries/regions around 2000 years ago. And the first documented use of gun powder based artillery was in China. From there it went to the middle east and came to India, obviously evolving along the way.

So, lets not kid ourselves about what we did not invent. Else it will be like claiming that we invented flying machines because of the "Pushpak Vimana".

However, you have a very valid point in terms of our competitiveness and lack of innovation etc. If Singapore can have relatively good pieces developed by ST Kinetics, we should really be ashamed of ourselves and our lethargic national attitude and lack of willingness to introspect and work on our weaknesses and harness our strengths.

Why does it have to take several years for the DRDO to make a 155mm gun?------------------------Because its DRDO. They may have been making the 105mm field gun for decades but they never designed it in the first place.BAE is right in refusing to put up with MOD's floundering any more. Somebody needs to slap wake GOI.Bravo BAE.